TMI Blog2008 (4) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... tems to new system and building in new functionalities, which could vary from user to another user. Thus, every maintenance or modification or bug repairing would require independent code and each such independent code/procedure including codes written of interfacing and specific problem solving relating to legacy programme would still be software's and nothing else. We also find from Explanation 2 to section 10A that computer software means any computer programme recorded on any disc, tape, perforated media or other information storage device which is transmitted or exported from India by any means. There is no dispute that whatsoever the software, the software which were in nature of bug repairing, interpreting and code maintenance programmes, could have been transmitted by the assessee to its client abroad only if it was recorded initially in some information storage device, which could be either the hard disc memory or any other memory devices temporarily or permanently used for the purpose of storing the programme codes. In taking this view, we are also fortified by the decision of the Tribunal in ISBC Consultancy Services Ltd. v. Dy. CIT [ 2002 (8) TMI 840 - ITAT MU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In case that OVI aims the right to use the AP sourcecode. Direction will do the correction of possible bugs in AP. Direction will perform maintenance services on call for repairing errors or other defects which occurred during the use of OVISS Software and/or were found in the OVISS software documentation. ------------------------------------------------------------------- 2. DSS/OV/001 22-6-00 6000 USD 2,66,177 -Do- ---------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch Circular No. 694, dated 23-11-1994, wherein regarding tax holiday under section 10A or 10B relating to computer software, the following clarification has been made : "Similarly, for the purpose of section 10A or 10B, as long as a unit in the EPZ/EOU/STP itself produces computer programmes and exports them, it should not matter whether the programme is actually written within the premises of the unit. It is, accordingly, clarified that, where a unit in the EPZ/EOU/STP develops software sur place, that is, at the client's site abroad, such unit should not be denied the tax holiday under section 10A or 10B on the ground that it was prepared onsite, as long as the software is a product of the unit i.e., it is produced by the unit." 5. Therefore, according to him it did not matter whether the programmes relating to software were actually written within the. premises of the unit or not and this would also mean that such programmes written within the premises of the assessee and transmitted to its client outside India, would be nothing but export of software. The learned Authorised Representative also submitted that maintenance programmes were nothing but software since according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the M/s. OVI in its various offices spread all over the world properly functioned and the tasks of the assessee included maintenance of the OVISS software, which included correction of flaws in OVISS, adaptation to new version of OVISS, and make correction in software documentation. Assessee was also required to give support installation and development work for replacement of the OVISS software and devising necessary interfaces between such OVISS software and replacement software and also development of one time software required to solve specific problems in data structures etc. As per para 3.5.1 of this agreement assessee is also obliged to do modification and enhancement of OVISS software and also make changes therein. The moot question is whether the above work could be called as manufacture or development of software. It is clear from the wordings of the agreement that assessee was mainly doing the work on a software called OVISS developed by one M/s. Compu Tact Software Services for assessee's client M/s. OVI. Assessee's obligations were to maintain these softwares and also to devise programmes for repairing its bugs, prepare for its replacement with another software progr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation and stabilization of a system, it enters into the ongoing development or maintenance stage." Thus ongoing development of a software system is nothing but its 'maintenance'. Or in other words, in the world of computer systems and software, maintenance is a part of ongoing development. Maintenance of software, especially when it involves ERP modules, or bought out software's would require routines and sub-programs for interfacing it with other legacy systems and also for migration from other legacy systems to new system and building in new functionalities, which could vary from user to another user. 7.3 Thus, every maintenance or modification or bug repairing would require independent code and each such independent code/procedure including codes written of interfacing and specific problem solving relating to legacy programme would still be software's and nothing else. This being the case and taking the totality of the services rendered by the assessee, as can be made out from the description of work given in the agreement, which inter alia mentioned corrections of bugs in OVISS, customizing programmes developed, code change in OVISS would all be nothing but manufacture/produ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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